Government Surplus

A BGA Rescuing Illinois investigation explores the glut of closed public facilities and why they are becoming a strain on communities statewide.

On the mantle of a marble fireplace amid shards of glass from a broken mirror, something small and metallic catches Kevin Senor's eye. He's making his way through the old and obsolete Joliet Correctional Center, through rooms where ragged wallpaper hangs in strips and crumbled drywall coats piles of litter on cracked floors.

"Twenty-twos," he tells Michael Lemke, rubbing layers of dust off the bullets.

Both men used to work in the Joliet Correctional Center, a storied but dilapidated hulk that has been ravaged by weather, fire, vandals and squatters since closing in 2002.

Now, Lemke runs Stateville Correctional Center outside Joliet, and Senor is his administrative assistant. The duo stopped by Joliet recently to provide the BGA a tour, reminiscing about the day the prison closed and it became "a ghost town," in Senor's words.

The 155-year-old Joliet prison with its 20-foot-high limestone walls and neo-Gothic guard towers is famous for prominent inmates and its star turns in The Blues Brothers and other movies and TV shows. Visitors from around the world regularly ask to see the prison, as they come through Joliet on historic Route 66, which cut through downtown en route to California; now this segment is IL-53.

City officials think the prison could be a tourist magnet. But they have to act soon – a point driven home by a July fire that destroyed a warehouse in the prison grounds. A January 2012 technical assistance panel convened by the Urban Land Institute and the Chicago Metropolitan Agency for Planning found that without prompt action, various buildings in the prison complex could be too dilapidated to save.

"If roof repairs are not completed within a few years the buildings may no longer be salvageable," says that report.

Time is running out on this age-old prison just as it is for scores of other shuttered, empty and usually rundown public facilities throughout Illinois (and other parts of the country). Owned by local, state, regional and federal government agencies, many of these vacant buildings have gone from being vital community centers to eyesores and civic liabilities, costing taxpayers big bucks to maintain.

It's usually hard to pump new economic life into these structures once they close -- it's very tough to convert a hospital or prison into condos, say real estate experts.

"People don't want to live where Grandma died, or where Grandma was in prison," says David Mann, principal/director of architecture, planning and design firm Booth Hansen in Chicago.

Federal law mandates that before selling an unused federal building, an agency must offer it to other government agencies and "qualified nonprofits for use in accomplishing public purposes," as the Congressional Research Service phrased it.

Almost all surplus buildings must be screened for homeless services, even if they are clearly inappropriate or unfit for that purpose, a requirement that can add two years to the disposal process according to the Congressional Research Service.

There are also requirements for environmental remediation, a serious issue in a place like the arsenal or a hospital where toxic materials and chemicals were used; not to mention that many old buildings are laced with asbestos and other contaminants.

U.S. Rep. Mike Quigley (D-IL5) has for several years been trying to address this problem, introducing bipartisan legislation that would help the federal government sell unused buildings. (See sidebar.)

Fixing a $1.6 billion problem(Click to read more)

Some buildings must be demolished, but even that process can take years.

Vacant government-owned buildings are a national problem but one Illinois lawmaker is proposing ways to help solve it.

The Congressional Research Service, which provides nonpartisan analysis for members and committees of Congress, reported in 2012 that the federal government owned 77,700 unused or underutilized buildings, maintained and operated at a cost of $1.67 billion in fiscal 2010, ending March 31, 2011.

Some buildings are historic, with significant architecture and a special place in the collective psyche. But because of red tape, budget crunches and a soft economy, they become blight on the surrounding area rather than contributing to the tax rolls or providing public services.

Other times buildings clearly must be demolished, but even that process can take years because of bureaucratic requirements.

U.S. Rep. Quigley

U.S. Rep. Quigley has for several years been trying to address this problem, introducing bipartisan legislation that would help the federal government sell unused buildings. The legislation, co-sponsored by U.S. Rep. Jason Chaffetz (R-UT), passed the House in March.

"The fact is we don't have a good inventory and there is no transparency," said Quigley.

As an example, he points to the old Joliet Arsenal south of downtown Joliet.

That ammunition-manufacturing complex was closed in 1976 and parts of the grounds have been transformed into the Midewin National Tallgrass Prairie. But numerous ramshackle buildings still stand.

The arsenal's Surface Storage Reservoir Building was listed in a U.S. Department of Agriculture inventory as in great shape and worth $8.2 million, with $82,264 supposedly being spent per year to maintain it. That caught the attention of Quigley staffer Robert Becker, who visited and found the building sagging and overgrown, "like something the jungle has reclaimed."

"Obviously nobody ever eyeballed the building," in making the estimate, Becker said.

On the state level, the Illinois Senate passed a law during the November veto session offering tax breaks to motivate private development at state-owned buildings that had at least 100 employees and closed within the past two years.

The measure, which would apply to several recently closed prisons, would offer state tax breaks equal to 30 percent of building rehabilitation costs. The bill passed unanimously in the Senate and was sent to the House.

Illinois' 109 extra buildings

The state has requirements similar to the federal government for disposing of unused buildings, with the process overseen by the state's Central Management Services (CMS).

Unused buildings can either be transferred to another state agency or sold. If the state decides to sell, a building must be offered first to the government of the county it is located in and other local governments within that county. They are not allowed to buy at less than full market value, as determined by three appraisals. If no governments bite within 60 days, buildings are sold at public auction where they can go to private bidders for less than the appraised value.

CMS spokesman Mike Claffey said the state has held off on selling properties since the economic crisis began in 2007.

"Now prices are rebounding and on the upswing, so we're hoping we'll be able to attract some good prices," Claffey said.

A list provided by CMS shows 109 designated "surplus" buildings at six sites statewide and 140 buildings at 10 sites in line to be labeled surplus. Of those, 119 buildings are at defunct detention centers, including the old Joliet prison and others closed this year in a move Gov. Pat Quinn said would save $100 million annually: the Dwight women's prison, the Tamms "Supermax" and two youth detention centers.

The Illinois Youth Center-Joliet was closed in February and may be used to house mentally ill adult prisoners in the future, said state corrections spokesman Tom Shaer.

Unused state prisons are not likely to sell on the private market, but they may be transferred or sold to local law enforcement agencies or to the federal government.

For example, Illinois "got a good deal" in selling the Thomson prison in northwestern Illinois to the feds last year for $165 million, Claffey contends.

Almost all surplus buildings must be screened for homeless services, even if they are clearly inappropriate or unfit for that purpose, a requirement that can add two years to the disposal process

The prison was built in 2001, but the cash-strapped state could never find enough funds to run it at more than a bare bones level and it remains virtually empty.

President Barack Obama's administration had previously proposed moving Guantanamo Bay prisoners into Thomson, but faced strident political opposition. Obama's 2014 budget includes $168 million for reopening the Thomson prison to house federal inmates. But many locals are skeptical, as they've heard the promises of jobs and economic stimulation for years to no avail.

The state also owns five shuttered residential facilities for people with mental health problems and developmental disabilities-in Tinley Park, Rockford, Jacksonville, Lincoln and Anna in far southern Illinois. The facilities were closed as government agencies and advocates pushed to shift people with mental illness and developmental disabilities from institutions into community-based care.

The only vacant state-owned property in Chicago is a 24-acre parcel at 2900 S. Damen Avenue, which houses abandoned silos right on the Sanitary and Ship Canal. The Atchison, Topeka and Santa Fe Railway Company deeded the site to the city in October 1928, Claffey said.

Claffey said he couldn't provide a total or average cost of maintaining vacant properties, with the price of grounds maintenance, security, pest control, waste removal and other services varying greatly.

Chicago's empty icons

Counties and municipalities typically have fewer bureaucratic requirements for unused government buildings. But selling or repurposing them before they fall apart is still a challenge.

A prime example in Chicago is the old county hospital on the near west side, a Beaux-Arts building with ornate terra cotta details and Ionic columns that marks its centennial in 2014. It is slated for reuse as part of the redevelopment of the Stroger Campus of county health care institutions.

But many preservationists and history buffs are frustrated, as they've seen the hospital deteriorate rapidly since closing in 2002.

A 2009 study by Jones Lang LaSalle explored the potential for turning the hospital into condos, a hotel or office space, and found there was very little private sector demand for any of these options. It recommended turning the building into county health system administrative offices, at a cost of about $107 million. The county health system did not respond to inquiries.

Kristen Mack, spokesperson for county board President Toni Preckwinkle, said an RFP for redeveloping the hospital would be issued in 2014, as part of "aggressive" movement on the campus redevelopment. She said the hospital is the only vacant building the county owns.

"The first priority is to preserve the structure for adaptive reuse and maintain the county's ownership," Mack said. "I cannot speak specifically to why nothing happened under the prior administration, however the recession took a major toll on real estate development over the last five years."

Then there's the old main post office on the southwest edge of downtown. In July 2009 the city auctioned off the 2.7 million square foot post office for $40 million to British developer Bill Davies. But he backed out on the deal, it was put up for auction again and after drawn-out negotiations Davies eventually ended up buying it for about $25 million. Now the notoriously secretive Davies is overseeing a residential and commercial redevelopment that could include a casino if they are ever allowed in Chicago.

Such large and unique structures present vexing architectural and financial challenges, said George Halik, principal/director of the architecture firm Booth Hansen that was involved with an earlier stage of planning the post office's redevelopment. He noted that state and federal historic landmark status can make selling or redeveloping a building even harder, an issue faced with the post office.

"There are a lot of things you can't do" to a landmarked building, said Halik. "Even things like covering parts of the façade."

Booth Hansen principal/director Mann countered that thick-walled, cavernous government buildings like the post office have become hip places to live and work. Many people appreciate historical details like old government signs or "Public School" carved in a stone lintel.

Since closing more than 40 public schools this year, Chicago has a whole new host of vacant city-owned buildings to deal with. That's on top of the 24 long-vacant school properties on the market at the end of 2012, according to a Pew Charitable Trusts study.

An advisory committee is considering how to reuse and deal with the shuttered schools. Residents and community groups have proposed their own ideas, including turning them into community centers, senior housing, urban gardens, small business incubators and other mixed public and private uses.

But almost any option would take money that is hard to come by as the city faces a $338.7 million hole in the 2014 budget and the Chicago Public Schools has cut millions from the budgets of the schools that remain open.

"Many of the structures are in fine condition – many are in excellent condition," said Asiaha Butler, leader of the Residents Association of Greater Englewood (RAGE), a community group that has talked informally with schools officials about the issue. "It would be unfortunate to see these just go into the wrong hands or just left closed or dormant, attracting vandalism and becoming another eyesore in the community."

Sunny Fischer, executive director of the Richard H. Driehaus Foundation, which funds preservation projects, warned against moving too hastily to demolish vacant schools. She urges creative solutions, including using the schools as training centers for historic preservation and material reuse. (The Driehaus Foundation is a BGA donor.)

"Think of what you can do with all that wood, with the old desks," she says.

Ruth Wuorenma is founder of the Neighborhood Capital Institute, which advises government agencies on public-private developments. She noted that there is extra weight hanging on how the government deals with vacant institutions like schools that are embedded in a neighborhood both geographically and psychologically.

"It may be something that was the heart of a community, their playground and open space, a civic anchor, more than bricks and mortar," she said. "So you have to find a way forward that reflects their identity, their past and their future aspirations, as well as market realities."

CPS spokesperson Rebecca Carroll said that there are 43 school sites vacant since the recent round of closings, some with multiple buildings. Of the 24 previously vacated schools properties noted in the Pew study, she said two have sold and seven more are expected to sell. CPS is negotiating with the city to see who will be responsible for maintenance and upkeep of the vacant schools. Carroll said the district is looking to aggressively market and reuse the schools, but bureaucratic requirements do make it more complicated.

"In order to negotiate a purchase price the board must receive two or more bids, and then can only negotiate with the top two bidders," Carroll said. "If the board could negotiate when any bids are received, and negotiate with all bidders, it would provide more opportunity to maximize revenue from building sales."

Back in Joliet, city officials say the state is probably willing to transfer the prison over to the city. That must be done through a public act passed by the state legislature – if the city got the prison otherwise, they would have to pay full market value.

Not only is Joliet not going to pay for the prison, they only want it if the state legislature first raises or appropriates $3.8 million to stabilize the structure.

Otherwise owning it would be a liability for a city that's running low on financial firepower.

"We're asking the state to help us at its worst time, we're mindful the state does not have a lot of discretionary dollars, but there are tourism funds available," said Joliet city manager Tom Thanas. "This is simply too big a project for Joliet to tackle on its own."

"I just hope we can get all the parties together and keep this place from falling to the wrecking ball," adds Mayor Tom Giarrante.